Intrinsic value of Kyocera ADR - KYO

Previous Close

$55.15

  Intrinsic Value

$14.61

stock screener

  Rating & Target

str. sell

-74%

Previous close

$55.15

 
Intrinsic value

$14.61

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of KYO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.84
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  12,386
  13,098
  13,399
  13,743
  14,130
  14,558
  15,028
  15,540
  16,094
  16,691
  17,332
  18,017
  18,748
  19,527
  20,354
  21,232
  22,163
  23,148
  24,189
  25,290
  26,452
  27,678
  28,971
  30,334
  31,770
  33,282
  34,875
  36,551
  38,315
  40,170
  42,122
Variable operating expenses, $m
 
  12,270
  12,548
  12,867
  13,224
  13,620
  14,055
  14,529
  15,041
  15,593
  16,186
  16,664
  17,341
  18,061
  18,826
  19,638
  20,499
  21,410
  22,373
  23,391
  24,466
  25,600
  26,796
  28,057
  29,385
  30,784
  32,257
  33,807
  35,438
  37,155
  38,960
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,476
  12,270
  12,548
  12,867
  13,224
  13,620
  14,055
  14,529
  15,041
  15,593
  16,186
  16,664
  17,341
  18,061
  18,826
  19,638
  20,499
  21,410
  22,373
  23,391
  24,466
  25,600
  26,796
  28,057
  29,385
  30,784
  32,257
  33,807
  35,438
  37,155
  38,960
Operating income, $m
  910
  828
  851
  877
  906
  938
  973
  1,012
  1,053
  1,098
  1,146
  1,353
  1,407
  1,466
  1,528
  1,594
  1,664
  1,738
  1,816
  1,899
  1,986
  2,078
  2,175
  2,277
  2,385
  2,499
  2,618
  2,744
  2,876
  3,016
  3,162
EBITDA, $m
  1,584
  1,379
  1,411
  1,447
  1,487
  1,533
  1,582
  1,636
  1,694
  1,757
  1,825
  1,897
  1,974
  2,056
  2,143
  2,235
  2,333
  2,437
  2,546
  2,662
  2,785
  2,914
  3,050
  3,193
  3,344
  3,504
  3,671
  3,848
  4,033
  4,229
  4,434
Interest expense (income), $m
  0
  8
  15
  24
  34
  45
  58
  71
  86
  103
  120
  139
  159
  180
  202
  227
  252
  279
  308
  338
  370
  404
  440
  478
  517
  559
  603
  650
  698
  750
  804
Earnings before tax, $m
  1,200
  820
  836
  853
  872
  893
  915
  940
  967
  995
  1,026
  1,214
  1,249
  1,286
  1,326
  1,367
  1,412
  1,458
  1,508
  1,560
  1,615
  1,674
  1,735
  1,800
  1,868
  1,939
  2,015
  2,094
  2,178
  2,266
  2,358
Tax expense, $m
  248
  221
  226
  230
  235
  241
  247
  254
  261
  269
  277
  328
  337
  347
  358
  369
  381
  394
  407
  421
  436
  452
  468
  486
  504
  524
  544
  565
  588
  612
  637
Net income, $m
  904
  599
  610
  622
  636
  652
  668
  686
  706
  727
  749
  886
  912
  939
  968
  998
  1,030
  1,065
  1,101
  1,139
  1,179
  1,222
  1,267
  1,314
  1,363
  1,416
  1,471
  1,529
  1,590
  1,654
  1,722

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,864
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,078
  25,783
  26,376
  27,054
  27,815
  28,658
  29,584
  30,591
  31,682
  32,857
  34,118
  35,467
  36,906
  38,439
  40,067
  41,796
  43,627
  45,566
  47,617
  49,783
  52,070
  54,484
  57,029
  59,712
  62,539
  65,516
  68,651
  71,951
  75,423
  79,075
  82,917
Adjusted assets (=assets-cash), $m
  21,214
  25,783
  26,376
  27,054
  27,815
  28,658
  29,584
  30,591
  31,682
  32,857
  34,118
  35,467
  36,906
  38,439
  40,067
  41,796
  43,627
  45,566
  47,617
  49,783
  52,070
  54,484
  57,029
  59,712
  62,539
  65,516
  68,651
  71,951
  75,423
  79,075
  82,917
Revenue / Adjusted assets
  0.584
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
Average production assets, $m
  -192
  3,956
  4,047
  4,151
  4,267
  4,397
  4,539
  4,693
  4,860
  5,041
  5,234
  5,441
  5,662
  5,897
  6,147
  6,412
  6,693
  6,991
  7,305
  7,638
  7,988
  8,359
  8,749
  9,161
  9,595
  10,051
  10,532
  11,038
  11,571
  12,131
  12,721
Working capital, $m
  9,350
  1,297
  1,327
  1,361
  1,399
  1,441
  1,488
  1,538
  1,593
  1,652
  1,716
  1,784
  1,856
  1,933
  2,015
  2,102
  2,194
  2,292
  2,395
  2,504
  2,619
  2,740
  2,868
  3,003
  3,145
  3,295
  3,453
  3,619
  3,793
  3,977
  4,170
Total debt, $m
  216
  282
  445
  631
  839
  1,070
  1,324
  1,600
  1,899
  2,221
  2,566
  2,936
  3,330
  3,750
  4,196
  4,670
  5,172
  5,703
  6,265
  6,858
  7,485
  8,146
  8,844
  9,579
  10,354
  11,169
  12,028
  12,932
  13,884
  14,884
  15,937
Total liabilities, $m
  6,758
  7,065
  7,227
  7,413
  7,621
  7,852
  8,106
  8,382
  8,681
  9,003
  9,348
  9,718
  10,112
  10,532
  10,978
  11,452
  11,954
  12,485
  13,047
  13,641
  14,267
  14,929
  15,626
  16,361
  17,136
  17,952
  18,810
  19,714
  20,666
  21,667
  22,719
Total equity, $m
  20,321
  18,719
  19,149
  19,641
  20,194
  20,806
  21,478
  22,209
  23,001
  23,854
  24,769
  25,749
  26,794
  27,906
  29,089
  30,344
  31,673
  33,081
  34,570
  36,142
  37,803
  39,555
  41,403
  43,351
  45,403
  47,565
  49,841
  52,236
  54,757
  57,409
  60,198
Total liabilities and equity, $m
  27,079
  25,784
  26,376
  27,054
  27,815
  28,658
  29,584
  30,591
  31,682
  32,857
  34,117
  35,467
  36,906
  38,438
  40,067
  41,796
  43,627
  45,566
  47,617
  49,783
  52,070
  54,484
  57,029
  59,712
  62,539
  65,517
  68,651
  71,950
  75,423
  79,076
  82,917
Debt-to-equity ratio
  0.011
  0.020
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.210
  0.220
  0.230
  0.230
  0.240
  0.250
  0.250
  0.260
  0.260
Adjusted equity ratio
  0.682
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726
  0.726

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  904
  599
  610
  622
  636
  652
  668
  686
  706
  727
  749
  886
  912
  939
  968
  998
  1,030
  1,065
  1,101
  1,139
  1,179
  1,222
  1,267
  1,314
  1,363
  1,416
  1,471
  1,529
  1,590
  1,654
  1,722
Depreciation, amort., depletion, $m
  674
  551
  560
  570
  582
  595
  609
  624
  641
  659
  678
  544
  566
  590
  615
  641
  669
  699
  731
  764
  799
  836
  875
  916
  959
  1,005
  1,053
  1,104
  1,157
  1,213
  1,272
Funds from operations, $m
  1,196
  1,149
  1,170
  1,193
  1,218
  1,246
  1,277
  1,311
  1,347
  1,386
  1,428
  1,430
  1,478
  1,529
  1,582
  1,639
  1,700
  1,764
  1,831
  1,903
  1,978
  2,058
  2,141
  2,230
  2,323
  2,421
  2,524
  2,633
  2,747
  2,867
  2,994
Change in working capital, $m
  -234
  25
  30
  34
  38
  42
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  92
  98
  103
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
  184
  193
Cash from operations, $m
  1,430
  1,124
  1,140
  1,158
  1,180
  1,204
  1,231
  1,260
  1,292
  1,327
  1,364
  1,362
  1,406
  1,451
  1,500
  1,552
  1,608
  1,666
  1,728
  1,794
  1,863
  1,936
  2,013
  2,095
  2,181
  2,271
  2,366
  2,467
  2,572
  2,684
  2,800
Maintenance CAPEX, $m
  0
  -388
  -396
  -405
  -415
  -427
  -440
  -454
  -469
  -486
  -504
  -523
  -544
  -566
  -590
  -615
  -641
  -669
  -699
  -731
  -764
  -799
  -836
  -875
  -916
  -959
  -1,005
  -1,053
  -1,104
  -1,157
  -1,213
New CAPEX, $m
  -633
  -80
  -91
  -104
  -117
  -129
  -142
  -155
  -167
  -180
  -193
  -207
  -221
  -235
  -250
  -265
  -281
  -297
  -315
  -332
  -351
  -370
  -390
  -412
  -434
  -457
  -481
  -506
  -533
  -560
  -589
Cash from investing activities, $m
  -976
  -468
  -487
  -509
  -532
  -556
  -582
  -609
  -636
  -666
  -697
  -730
  -765
  -801
  -840
  -880
  -922
  -966
  -1,014
  -1,063
  -1,115
  -1,169
  -1,226
  -1,287
  -1,350
  -1,416
  -1,486
  -1,559
  -1,637
  -1,717
  -1,802
Free cash flow, $m
  454
  656
  653
  650
  648
  648
  649
  652
  655
  660
  667
  632
  641
  650
  661
  673
  685
  699
  715
  731
  748
  767
  787
  808
  831
  855
  880
  907
  936
  966
  998
Issuance/(repayment) of debt, $m
  -53
  134
  162
  186
  209
  231
  254
  276
  299
  322
  346
  370
  394
  420
  446
  474
  502
  531
  562
  594
  627
  661
  697
  735
  775
  816
  859
  904
  951
  1,001
  1,053
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  3
  45
  86
  126
  166
  93
  133
  174
  215
  257
  299
  343
  388
  434
  481
  531
  581
  634
  689
  746
  805
  867
  931
  998
  1,068
Cash from financing (excl. dividends), $m  
  -70
  134
  162
  186
  209
  231
  257
  321
  385
  448
  512
  463
  527
  594
  661
  731
  801
  874
  950
  1,028
  1,108
  1,192
  1,278
  1,369
  1,464
  1,562
  1,664
  1,771
  1,882
  1,999
  2,121
Total cash flow (excl. dividends), $m
  367
  791
  816
  836
  857
  879
  906
  973
  1,040
  1,109
  1,178
  1,095
  1,168
  1,244
  1,322
  1,403
  1,487
  1,574
  1,664
  1,758
  1,857
  1,959
  2,066
  2,178
  2,294
  2,416
  2,544
  2,678
  2,818
  2,965
  3,118
Retained Cash Flow (-), $m
  -435
  -363
  -431
  -492
  -553
  -612
  -672
  -731
  -792
  -853
  -915
  -979
  -1,045
  -1,113
  -1,183
  -1,255
  -1,330
  -1,408
  -1,489
  -1,573
  -1,661
  -1,752
  -1,848
  -1,948
  -2,052
  -2,162
  -2,276
  -2,395
  -2,521
  -2,652
  -2,789
Prev. year cash balance distribution, $m
 
  2,712
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,140
  385
  343
  304
  267
  234
  241
  248
  256
  263
  116
  123
  131
  139
  148
  157
  166
  176
  186
  196
  207
  218
  230
  242
  255
  268
  283
  297
  313
  329
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  3,011
  353
  299
  250
  207
  170
  163
  155
  147
  138
  55
  53
  50
  47
  43
  40
  36
  32
  29
  25
  21
  18
  15
  12
  10
  8
  6
  5
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.8
  99.4
  98.8
  98.1
  97.7
  97.2
  96.5
  95.8
  94.9
  93.9
  92.9
  91.8
  90.6
  89.3
  88.1
  86.7
  85.4
  84.0
  82.6
  81.1
  79.7
  78.2
  76.8
  75.3

Kyocera Corporation is engaged in various fields, from fine ceramic components to electronic devices, equipment, services and networks. The Company operates through seven segments: Fine Ceramic Parts Group, Semiconductor Parts Group, Applied Ceramic Products Group, Electronic Device Group, Telecommunications Equipment Group, Information Equipment Group and Others. The Company's products include components for semiconductor processing equipment and flat panel display manufacturing equipment, information and telecommunication components, general industrial machinery components, sapphire substrates, automotive components, solar energy products, cutting tools, medical and dental implants, jewelry and applied ceramic related products, page printers and multifunctional products. It also offers information systems and telecommunication services, engineering business, management consulting business, materials for semiconductors, chemical materials and realty development business.

FINANCIAL RATIOS  of  Kyocera ADR (KYO)

Valuation Ratios
P/E Ratio 22.4
Price to Sales 1.6
Price to Book 1
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 25.4
Growth Rates
Sales Growth Rate -3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.4%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio 79
Current Ratio 0.3
LT Debt to Equity 0.7%
Total Debt to Equity 1.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity 4.5%
Return On Equity - 3 Yr. Avg. 5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 26.2%
Gross Margin - 3 Yr. Avg. 25.9%
EBITDA Margin 15.1%
EBITDA Margin - 3 Yr. Avg. 14.3%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 6.6%
Pre-Tax Margin 9.7%
Pre-Tax Margin - 3 Yr. Avg. 9.2%
Net Profit Margin 7.3%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 20.7%
Eff/ Tax Rate - 3 Yr. Avg. 13.1%
Payout Ratio 38.5%

KYO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KYO stock intrinsic value calculation we used $12841 million for the last fiscal year's total revenue generated by Kyocera ADR. The default revenue input number comes from 2017 income statement of Kyocera ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KYO stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for KYO is calculated based on our internal credit rating of Kyocera ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kyocera ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KYO stock the variable cost ratio is equal to 93.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KYO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Kyocera ADR.

Corporate tax rate of 27% is the nominal tax rate for Kyocera ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KYO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KYO are equal to 30.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Kyocera ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KYO is equal to 9.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $21068 million for Kyocera ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 367 million for Kyocera ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kyocera ADR at the current share price and the inputted number of shares is $20.2 billion.

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Financial statements of KYO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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